Illinois Joins The Majority Of States In Allowing Unions Recovery Under The State Mechanic Lien Statutes And ERISA

Gregory R. "Greg" Meeder is a Partner and James Chivilo an Associate in our Chicago office

The Second District Appellate Court in Illinois recently confirmed that union pension funds and unions may proceed with mechanics lien claims in state court even though the pension fund or union may have already filed a claim under the Federal Employee Retirement Income Security Act (ERISA) in federal court. Central Laborers' Pension Fund v. Nicholas and Associates, Inc. 2011 WL 4035772 (2d Dist., September 2, 2011) recently aligned the state of Illinois with the majority of states which allow union pension funds alternate and convenient theories of recovery under both ERISA and the Illinois' Mechanic Lien Act 770 ILCS 60/1 et.seq. (the "Act"). Owners now have expanded liability under the Central Laborers' Pension Fund decision and contractors must realize that they may now have to defend the same claim in two different forums.

Owners and Contractors: Be Aware of Your Subcontractors' Contribution Requirements

Prior to Central Laborers' Pension Fund it was generally understood that pension funds and unions could be barred from recovery under the Act after initiating claims under state prevailing wage statutes. See General Laborer's District Counsel v. James McHugh Construction, 230 Ill.App.3d 939, 596 N.E.2d 19 (1st Dist. 1992). Central Laborers' Pension Fund illustrates that owners and contractors in Illinois need to be aware of whether or not their subcontractors are making contributions under their collective bargaining agreements. Pension funds and unions now have alternative and redundant avenues of recovery enabling them to directly lien construction projects. Concurrent or simultaneous mechanics liens to collect unpaid contributions with or without an ERISA action pending in federal court will impact a project's progress, the payment process and the relationship between contractors, subcontractors and their owners.

In Central Laborers' Pension Fund, two appeals involving two distinct municipal school districts and their construction projects were consolidated. In both projects, the municipal school district had retained the same general contractor, Nicholas Associates Inc. (NAI). Each general contract that NAI had entered into with each respective school district was a distinct contract for a specific project. In both projects, NAI contracted with the same subcontractor, KMC Masonry Inc. (KMC). KMC provided labor and materials for masonry work...